POST-MITCHELL PRE-DENTON DECISION TO GRANT RELIEF FROM SANCTIONS OVERTURNED ON APPEAL

December 8, 2014 · by · in Appeals, Applications, Civil evidence, Civil Procedure, Relief from sanctions

In British Gas Trading -v- Oak Cash & Carry [2014] EWHC 4058 (QB) Mrs Justice McGowan DBE overturned a decision granting a defendant relief from sanctions. What is particularly interesting is that the original decision was made post-Mitchell but prior to Denton.  Even applying the Denton criteria the judge held that relief from sanctions should not have been granted.

THE CASE

The claimant was bringing an action for unpaid electricity bills Both parties were required to file listing questionnaires by the 3rd February 2014. The defendant had not filed a questionnaire by the 10th February 2014 and an  unless order was made. Unless the defendant filed a questionnaire by the 19th February 2014 the action would be struck out.  The defendant subsequently filed a directions questionnaire but not a listing questionnaire with the court. The listing questionnaire was not filed until the 21st February 2014 when it was filed at court by fax.

JUDGMENT IN DEFAULT AND RELIEF FROM SANCTIONS

The claimant sought, and obtained, judgment in default for £211,388.61. The defendant applied for relief from sanctions. The circuit judge granted relief on the 15th April 2014 and set aside the default judgment.

THE TIMING OF THE HEARING BEFORE THE CIRCUIT JUDGE

Note that the hearing took place after the judgment in Mitchell before before the judgment in Denton.

DENTON DOES NOT ALTER THE “BRAVE NEW WORLD” OF DENTON

The judge observed that

  1. The brave new world of Mitchell and its application caused new cases to come again before the Master of the Rolls on appeal and in July 2014 judgment in the case of Denton was handed down. Denton restated and gave greater definition to the views of the court expressed in Mitchell. There were adjustments to facilitate greater understanding and perhaps a greater explanation but Denton does not alter the statement of principle as set out in Mitchell.

THE THREE STAGE TEST

Mrs Justice McGowan applied the three stage test:

1. The serious and significance of the breach This was a failure to comply with a directions order and an unless order. The defendant had three months in which to complete a not particularly difficult questionnaire. When a form was sent to court in an attempt to comply it was the wrong form.

2. Why the default occurred  The defendant’s solicitor had certain personal difficulties with which the court had sympathy.

“That being said, this was a significantly sized firm, over 40 qualified solicitors practised within the firm. There must be provision for those who have the responsibility of conducting litigation who know that they may not be available because of an ongoing medical problem to delegate the work to others who have sufficient experience and skill to ensure that tasks are properly completed. It appears clear in this case that it was not until about the time that the “unless” order was issued, that the solicitor with conduct of the case delegated the task of complying with the order to a trainee solicitor. That trainee solicitor must not have had sufficient experience to identify the correct form and ensure it was completed and must not have been adequately supervised in the purported compliance with the order. Notwithstanding all due sympathy for the predicament that the solicitor who has conduct of the litigation found himself in, it cannot be a good reason for a failure to comply with the original order, throughout a three month period and a subsequent failure, having delegated the work to another. Nor is there a good reason why that trainee solicitor was not properly supervised or controlled in that exercise.”

3. All the circumstances of the case

“In considering all the circumstances of this case, I take into account the effect of the failure to comply. It is accepted that a questionnaire of this sort might not be the most important document provided by either side in the conduct of litigation. That being said, the persistent failure to provide such a questionnaire meant that in this particular case the trial date of two days was lost. That must be a matter of grave concern when one looks as the court did in Mitchell to the overall effect of such a breach, to the impact that it would have not only on the conduct of this piece of litigation but all those other cases awaiting dates for hearings and the waste of valuable court time, which is already massively under strain. I also bear in mind the effect on the Defendant of their not being granted relief from sanction in this case. The finding against them is one in a substantial sum. It is unfortunate, to say the least, that the consequence of a refusal to grant relief from sanction in a case such as this, will in certain circumstances mean satellite litigation. It may well mean that the Defendant now has to bring an action against its own solicitors. Neither side has asked me to consider the strengths of the relative cases in the original action.

  1. It is to be noted in this case that at the point where the Claimant’s solicitors had appreciated the failure of the Defendant’s solicitors to provide the required questionnaire, the matter was returned to court, an extension of over two weeks was effectively given by the provision of the “unless” order and the requirement of the questionnaire was neither unusual nor onerous. It cannot fairly be said in this case that the Claimant sought to take advantage of an insignificant or trivial failing on the part of the Defendant. In effect a second chance was granted by the issue of the “unless” order”

THE JUDGE’S ORDER GRANTING RELIEF FROM SANCTIONS WAS OVERTURNED

“20. In my view the learned Judge fell into error in applying an overly generous interpretation of the judgment in Mitchell. The three stages as enumerated in Denton, which as I have said already simply define the decision in Mitchell, set out the test which must be followed. In following that test it is clear;

i) that the breach here was both serious and significant,ii) that in the circumstances of this case there was no good reason for such a breach and,

iii) that in looking at the circumstances of the case as a whole there is no reason why relief from sanction should be granted.

  1. Returning to the grounds of appeal,

i) Ground one, that the learned trial Judge misapplied CPR3.9 is properly made out.”

THE SECOND GROUND OF APPEAL

The second ground of appeal argued that the judge erred in setting aside the default judgment when there was no specific application to do so. This argument was accepted on appeal.

ii) Ground two, insofar as it is necessary for me to determine, is also made out. In the absence of an application to set aside the default judgment, a matter seemingly not thought of by those acting on behalf of the Defendant at the time it applied to the Judge for relief from sanction, the court should not simply take the view that the application ought to have been brought and therefore would be treated as though it had been brought. In any event there was, as was pointed out by the Appellant no evidence in support of such an application. Accordingly, ground two is also made out.

  1. For the reasons above this appeal succeeds. The order of the learned Judge of 15th April 2014 is set aside; judgment is entered for the Claimant.

SO DENTON DOES NOT GIVE CARTE BLANCHE

It is clearly a mistake to regard Denton as giving a carte blanche to those in default. Relief from sanctions is not automatic.  It may, and should, have got rid of some of the “ridiculous” technical points in relation to compliance. However breaches which lead to the losing of a trial or hearing date are still taken seriously.

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